Thread by @aditya942000

🧵Route Mobile - Routing Messages to your Mobile📶

Just a brief thread on what Route Mobile does & what the future holds for it?

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📲Route Mobile Ltd (RM) provides cloud-communication platform as a service (CPaaS) to enterprises, over-the-top (OTT) players & mobile network operators (MNOs).

Confused❓

👉So what they basically do is that they act as an intermediary between enterprise & their customers.

Further Simplifying it ➡️ The msgs which u receive on ur phone for banks transactions,OTP,Order confirmation from e-comm etc. are all routed through CPaaS Software known as API’s.

➡️Their Api’s are integrated with the enterprises whch they serve and they get revenue per sms sent

👉So this was about A2P msging (text msgs) whch u receive normally.

👉But as digitization is picking up, therefore means of communication r also evolving.

📞 Nowadays co’s interact with their customers through IVR,Whatsapp,Viber , Rich Communication Services (RCS)etc.

👉RM also specializes in providing communication through these OTT apps

👉The A2P buss contributes majority of rev. but its a commoditized buss. & hv lower margins.

👉Whereas these new means of communication like whatsapp,viber etc. hv higher margins.

How services r provided❓

Wat they do is that they provide their system to d customers as per the demand.

👉E.g. If a co. want to contact customers through SMS+ whatsapp ,then RM will integrate their API into the systems of the co. which will enable them to contact customers

👉Further, they also offer SMS analytics, firewall, filtering and monetization, SMS hubbing and Instant Virtual Number (IVN) solutions to MNOs(Mobile Network Operators) across the globe..

👉These services also hv higher margins as compared to A2p

Industry Growth Rate❓
TAM - $7bn, in 2020
👍 Expected to grow 30% cagr till 2025 (Est. $26bn)

Customers❓
👉Its clients include some of the world’s largest and well-known organisations, including a no. of Fortune Global 500 companies.

👉Some marquee names like SAMSUNG ,FACEBOOK & GOOGLE are their customers providing strong client reference-ability.

👉Their focus is not to get as many customers as they can but to get Quality Customers who can help in inc. the margins.

👉Their buss. model is such that there is stickiness among customers once they r acquired.

👉For FY21 net revenue retention stands at 140%.
Which means they not only retained their top 50 customers but also inc. share out of them.

👉Their client concentration is skewed as top 10 customers contribute 59% of the revenues.

👉Therefore any loss of customer could impact the rev. in a major way.

Lets hv a look on some of the Acquisitions
- 365squared Ltd which operates in SMS analytics, firewall, filtering and monetization
-Call2Connect -a company which offers voice, non-voice and consulting BPO services to some of the largest enterprises in India
-Phonon for CXPaas

👉The latest acquisition done by them is JOHN OWEN,
who has been appointed as CEO of US & Europe regions.

This is where things become very interesting.WHY❓
👉John Owen has a spectacular track record and his previous employment at Mastek Ltd. really turned fortunes of that co.

So wat is the revenue model❓
👉RM has a no. of clients on a pre-paid business model where the client pays upfront allowing it to reduce the overall working capital cycle.
👉In addition to a security deposit or a credit line paid in advance by RM,it is typically required .....

👉..to pay MNOs within a specified period, usually ranging between 60 and 80 days.

👉It enjoys negative working capital as DSO stands at 55days and DPO stands at 80 days .

👉Further, revenue is directly linked to usage based on each transaction(i.e. per minute of voice/video conversation, per SMS message, per authentication, etc.)
👉 It is based on a pricing model where it has an ability to change the prices offered based on prevailing market...

..rates or owing to increase in rates by MNOs as a result of regulatory action.

So, any price hike can easily be passed on.

NOTE:🚨
They hv not required any capital infusion in the Company since Fiscal 2007 & has grown its operations primarily through internal accruals & debt.

👉BENEFITS OF OPERATING LEVERAGE :

- They can serve more customers & handle heavy volumes easily & for that they do not need any incremental Investments.

-the adv. they hv over their competitors is being a low cost service provider

RISK🚨

👉An accelerated shift to newer channels of communication

👉Route Mobile’s pricing vis-à-vis competition can come under pressure, as larger global players (Twilio, Sinch) consolidate their business operations.

👉Top 5 clients contribute 45% of the revenues.

Coming to the most imp part

The Future :
👉Target is to close those OTT players which are there in the market but are not their customers, by giving them direct connectivity LOW Latency and better cost.

👉New buss. line to contribute 30-40% of revenues from current 2.6% ONLY

👉GROSS MARGIN TARGET OF 30%

👉With new technologies like rcs , watsapp ,voice their margins will eventually go up.

#routemobile

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